Tax compliance

Tax compliance refers to the extent to which a taxpayer meets all legal requirements under the tax system. This involves reporting income truthfully, filing returns within the prescribed deadlines, keeping adequate documentation, paying any tax due, and cooperating with tax authorities when queries or notices arise. Strong compliance helps avoid penalties or disputes, whereas failing to comply may attract fines or other legal consequences.

Example: Consider an individual who declares all sources of income — salary, bank interest, and investment gains — submits their return before the due date, and clears any remaining tax dues. This person is fully complying with their tax responsibilities.